Archive for May, 2009

The ancient Greeks used to say that thinking makes it so. Which is to say, that if you can conceive of an idea, then it can become a reality. My neighborhood has several families that display signs in their front yards which say “War is not the answer.” I know the people that put up these signs; I like them and I respect their commitment to the notion that there can be a better way. As a society, we are obligated to making things better. It’s a noble goal for any time, but given current trends, not necessarily a very realistic one. And thinking earnestly about something does not guarantee acceptance.

A Different Form of War

Now, we are in a different kind of war; instead of a battle for geographic territory, the battlefield is for the mind. Instead of a map with clearly delineated colors, we have spheres of influence and the enemy could be anywhere at any time. At the same time, it is the stated policy of the current administration for the United States to disengage itself from the unpopular war in Iraq. The key turn of phrase is “an unpopular war”, which should be differentiated from the term “an unnecessary war”.

In looking back, it’s pretty hard to find a popular war, but I’m sure that there have been such. Certainly, war can be popular with the political and military leadership, but not usually so much so with the general populace. The general populace has more to lose. On the other hand, our military are entirely volunteers of one shade or another. I suspect that some may have joined without regard to the possible consequences, but it seems that the vast majority of our armed forces joined out of respect for the need for freedom in this world. It is not the soldiers, it is the process of execution of the war that is unpopular. And it is not really the execution of the war so much as it is the time that this war has consumed.

Because this is a war for the mind, and that territory is a collateral issue, the battle action has become a game of Whack-a-mole. With Iraq on the way to some form of stability, the enemy seeks out another unstable region. I suppose that the term enemy itself makes some uncomfortable. At the same time, the enemy’s attitude toward women makes me more uncomfortable. I wonder how many modern female residents of the United States would agree with the enemy’s policies if they were directly applied to them, right here in the U. S. Likewise the enemy’s attitude toward other religions. Likewise their attitude toward personal conduct and freedom.

In short, we don’t agree with them, so just how much of this is okay? It’s one thing when it is on the other side of the world, but now that mentality has crept into Europe. Nor can we expect a sense of coexistence with this idea. If you’re not sure, just remember the cartoonist’s plight in Denmark.


People assume that all others are rational and view the same world with the same eyes. Yet, you don’t see as many of these front yard anti-war signs in North Korea or in Iran as you do here in Brookhaven, but there still may be hope. The upcoming Presidential elections in Iran on June 12th may move more moderate individuals into power. Or the United Nations General Assembly may yet pass another stern resolution with the right words that finally stops North Korea’s aggressive actions. The Taliban might realize the error of its ways. For the moment however, the United States looks like a globalized Rodney King, pleading “Can’t we all get along?”

On the other hand, not-thinking of something is no guarantee that everyone else will not-think of it either. Denying an idea does not make it go away. Not thinking about something may actually invite its occurrence because we are not recognizing the possibilities. The media is full of stories that are based upon the premises of may, or could, or might, which may just be another expression of the notion that thinking makes it so. At the same time, one must be prepared for eventualities, no matter how inconvenient they might be. Just in case. Not thinking about some of the realities in the world makes us look like a nation of obsessive-compulsives, worrying about things that are distant eventualities, rather than paying attention to what is important.

Nor does appeasement work, it simply feeds the illicit desires of an aggressor nation. Because of our national historical amnesia, we have forgotten that. When Neville Chamberlain got off the plane from Munich in 1938 with a peace agreement from Adolf Hitler, he felt that he had done the right thing. Later that day, he would describe this agreement as “Peace for our time”. Earlier that day, as his plane departed Germany to the cheers of the crowd, the Ol’ Paperhanger turned to an aide and said: “Was für ein Moron.” Chamberlain was an honorable and sincere man. Hitler was not.

A Full Fledged Axis

Since the free-market economy is the enemy, we are a convenient point of reference for those who do not like freedom. Enemies tend to accumulate. Disturbing is the apparent advent of a three-front war, with its attendant strain on our military resources. What’s particularly disturbing is nuclear proliferation and our seeming inability to keep things stuffed into the bottle. North Korea is ramping up for war, developing nuclear devices and the systems to deliver them. There already is war in Iraq, with the promise of more from Iran. We have a war in Afghanistan and a client war in Pakistan. Each are wars with the same conflict of ideas and each with the same potential loss of freedom. But what is particularly disturbing is that with limited military resources and an unlimited enemy, the world will be overwhelmed until all this is left is us.

The Nuclear Option

Although we are unwilling to use nuclear weapons, this is not the case for others. It is, of course, unthinkable for us to use nuclear weapons again, but much of this piece is about the unthinkable. Use of nuclear weapons by a third-world country offers them great gain, a quick move right up to the forefront of world attention. And it creates a great loss for the balance of the world. In addition to the physical effects of a nuclear surface blast, there are the untold effects upon our economy, our mind set, our whole notion of life.

If North Korea throws a nuclear weapon onto South Korea, what will our response be? If a second weapon is thrown onto Japan, what will our response be? If Iran throws a nuclear weapon onto Israel, what will our response be? At what point will public outcry be such that we must reply in kind? At this point in our progressive development of destructive technology, the nuclear device gives us the most bang for our buck. Our reluctance to use this technology does not guarantee that others are of like mind.


We are challenged to find an effective answer. If war is not the answer, we are obligated to find another resolution.

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3 Local TV Stations to Pool Resources

A little noticed media story appears to have slipped under the radar. Appearing on page A14 of the local Atlanta Journal Constitution for May 23, 2009, it was reported that Atlanta televisions stations WAGA, WXIA and WGCL had begun the practice of pooling television cameras at local news events.

If one were to try and sneak things by the viewing public, it couldn’t have been handled better. By appearing in the local newspaper (which is in a state of decline anyway), on the Saturday of a holiday weekend, buried back in the business section, this could easily qualify as an obscurity hat-trick.

Of course, costs are at the base of everything, especially these days, but television management does make a cogent point that there are just so many different camera angles. When six stations arrive at the scene of an event, there is just so much that can be done with the visual aspects of the story. Not to mention the fact that the crowding and jostling is undignified. On the other hand, this practice will be a departure from local style. Gaining its start in Philadelphia and other markets, this is presumably the way of the future.

They say that the gorilla is an endangered species. For many years, local vernacular for the television cameraman was “a gorilla“, because they had to be big strapping lads to carry the heavy cameras of that day. There was even a local affair called The Gorilla Ball, in which the various outtakes and mistakes of the on-air talent were paraded for the amusement of their fellow media mavens. What started out as the camera people gathering after hours for beer and jeering, finally blossomed into an official event, complete with black tie. Presumably, the gorilla term is no longer used since the arrival of the Betacam. At the same time, it appears that the cameraman’s role in the awards process is also being diminished.

Regardless, the pooled camera feed can be viewed in two ways. For the glass-is-half-empty crowd, this is just further proof that things are circling the drain. Given the general temper of the times, this is not an unreasonable assumption.

While there are those who view things as being in constant downward entropy, I prefer to view this as an interesting opportunity. Certainly, it is possible that two camera positions will be eliminated, but it could just as easily be viewed the other way. Instead of three cameras covering one event, you could have three cameras covering three events.

In a way, this is a refreshing departure from the zero-sum mentality of the past. The stringent economic times have made all of us look at the way that we live, the way that we do business. And out of this are coming some positive outcomes. Another television station down the street is not the enemy, the enemy is the computer screen, Nintendo and apathy.

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Television is the box in which they buried vaudeville.

Even though I’m not old enough to remember vaudeville, I am old enough to remember the products of vaudeville. That is, the black and white television of the 1950’s. Certainly there were Ed Sullivan and Sid Caesar, but I especially remember the comedians such as Henny Youngman, to whom the above quote is often credited. There were Sheckys and Joeys, and there were smart funny women from that era such as Imogene Coca, Phyllis Diller and even a young woman named Joan Rivers, the poster girl for cosmetic surgery. They were all comedians who earned their chops on the Borscht Belt circuit in upper New York State. Television had renewed their careers as the Catskill Mountains resorts such as Grossinger’s faded into obscurity.

In the early 1950’s, television was a new toy, frisky as a colt and just as entertaining. A lot of television in that era was hopelessly square, because the audience itself was hopelessly square. And nobody took the medium all that seriously because the television was new and experimental. Television stations were turned on near dawn, the national anthem was played and then perhaps a brief sermonette from one of the local religious leaders who had landed a gig in television. TV ran until when Jack Paar (then later Johnny Carson) signed off. The national anthem was played and then television went home to their families and bed.

Then one day, television started to take itself seriously and things would never be the same. You can thank Newton N. Minnow for this, be it good or bad, but after a speech in 1961, typically called The Vast Wasteland speech, television became a serious medium because it would never do to have empty minded entertainment. Part of his words in 1961:

But when television is bad, nothing is worse. I invite you to sit down in front of your television set when your station goes on the air and stay there, for a day, without a book, without a magazine, without a newspaper, without a profit and loss sheet or a rating book to distract you. Keep your eyes glued to that set until the station signs off. I can assure you that what you will observe is a vast wasteland.

You will see a procession of game shows, formula comedies about totally unbelievable families, blood and thunder, mayhem, violence, sadism, murder, western bad men, western good men, private eyes, gangsters, more violence, and cartoons. And endlessly commercials — many screaming, cajoling, and offending. And most of all, boredom.”

Which is to say, almost fifty years later, that not much has changed with television. Some things did change, however, most notably television news. In that 1960’s era, a national sense of urgency filled the land. The Russians had launched the first satellite into outer space in 1957, and the United States was eager to win the space race. The President had announced that America would put a man on the moon by the end of the decade. The threat of nuclear war was an ever present fact of life. Conventional war was ramping up, very quietly at first, in Southeast Asia. And in that era, television news had earned its place.

Most of all, this would be the beginning of a time when the reporting of news would take on a serious and complex cloak of dignity, when what the television said meant something. In that era, there were typically three choices of which news you heard. What had started out with 15 minutes grew into 30 minutes, and then an hour and maybe even an additional half hour. Since there were only three outlets, people often had the shared experience of the news. You could strike up a conversation with someone that you barely knew, starting off with “Did you see Huntley / Brinkley last night?”

So many of them had been correspondents during World War II, when freedom of thought was under serious threat and winning the war was an important goal. They spoke with the gravity of people who had been shot at during their coverage of the war. Others, such as Dan Rather, spoke with the gravity of having worked a natural disaster, Hurricane Carla; I remember Hurricane Carla, I was there. In any case, television news began its ascendency in that era, and when Walter Chronkite announced that the Viet Nam war was unwinnable, people took it seriously. No matter that U. S. troops and the ARVN had beaten back the enemy during the Tet Offensive. Truth is the first casualty of war.

As television grew out of its adolescence, its role in American life grew also. At the local level, television news became a major component in any television station’s business model. The demand was insatiable; the profits were so, too. Because the news was a rich source of revenue, spending followed along. News departments grew in size, technology followed along; satellite trucks and helicopters became indispensible. News anchors found themselves at the very best restaurant tables. Their power and influence were renown, and woe be to the politician who did not yield to their whim. Our view of the world became the view of those living in New York City and on the West Coast, because they were the ones that chose what we saw, what we read and, in the end, what we thought. Certainly one of the greatest high points was on the Johnny Carson show when a 22-year old Hollywood starlet began talking on television about how icky nuclear war is.

Of course, this was all to change; fast-forward to today. And remember the small, brief, tiny comment from Warren Buffett: “As long as newspapers were essential to readers, they were essential to advertisers, he said. But news is now available in many other venues.” He was talking about the newspapers, but he could just as easily be talking about television news. There are considerably more outlets for the news than just television, much less local television. So, what is happening to the newspapers now appears to be approaching television. One clue can be found in this photograph, which I lifted from a local blog, Live Apartment Fire. It certainly gives you a sense of the way that things are going.

The New and The Old

The New and The Old

LAF covers the local media from the inside out, and is an interesting view into that world. It reveals the behind-the-scenes stuff, such as sending reporters to “Back Pack School”. It also offers a clue to the state of mind of television management, and they have to be concerned. Certainly the television stations are looking at their numbers also and realizing that the golden days are over. This is not to say that they are going out of business.

You always end up viewing the world from the perspective of your special interests. For me, it is my beloved railroads, and what you see there can certainly reflect upon the world at large, perhaps even accurately. When the railroads were new, they were ascendant; this new technology revolutionized travel and transport. Dime novels were written about the heroic railroaders and every boy wanted to grow up to be a locomotive engineer. As with any new technology, there was the temptation to maximize profits, which is not necessarily a bad thing since improved efficiency has benefits in many areas. When the railroads began to exceed their reach, the American public reacted and Congress passed regulations which effectively put the railroads into a state of perpetual decay. As competing forms of transportation emerged, and the government systematically supported them, the railroads began to founder. In my youth, my parents were concerned about my interest in such a dying institution. Of course, in the fullness of time, the railroads would be deregulated and their natural role in transportation would return to what it is today. The railroads were too important to fail, but they were able to do it in spite of a governmental presence.

Television news has had some noble moments. The press actively covered the civil rights movement; the American public saw, and were appalled. The press can also be spectacularly lazy. One local television reporter used to do live shots from a certain home improvement store simply because it was a five minute drive from the studio. Television news will not go away, but it will change. We have relied upon the news reporters to protect our interests. Now, at a time when government spokespeople speak empty words, we need the media to determine the actual truth, not the relativistic truth of those who seek to deceive.

We are in the midst of societal changes equal to the moving of tectonic plates, and just about as visible. Periodically, rumblings from far below the surface tell you that something is happening. One thing that has been lost is a sense of common perspective. When it was just the three television networks, the citizens had a sense of being together. Now with a multitude of news sources, and not all of them broadcast over the air, things have become fragmented, we share less together.

At the same time there is some source of hope. Regardless of governmental regulations or whatever slick idea tries to force people to do something, it is the silent hand of the market that is the final arbiter.

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For most newspapers in the United States, we would not buy them at any price….. They have the possibility of going to just unending losses.

You know that things are pretty bad when the world’s most famous investor, Warren Buffett, announces that a business sector has had it. And this from a guy who has investments in the Washington Post Co. (he said the company has a solid cable business, a good reason to hold on to it, but its newspaper business is in trouble). Going further, he added that “As long as newspapers were essential to readers, they were essential to advertisers, he said. But news is now available in many other venues.”

The vice-chairman of Berkshire Hathaway, Charles Munger, continued: “a national tragedy….These monopoly daily newspapers have been an important sinew to our civilization, they kept government more honest than they would otherwise be.” In this day and time, a lot of institutions are on the brink of extinction. So, what’s the big deal?

Coming into this discussion, you must acknowledge that business models change over time.  There are numerous industries that once thrived but no longer exist.  And, other industries still exist, but in a substantially different form; consider FMC , which started off life making industrial sprayers, then chemicals & food processing machinery and now makes tanks for the military.

Or, even within an existing business model, things change. Consider the Atlanta Journal. There was a time when Atlanta had two newspapers, the morning Constitution and the evening Journal. More, the Atlanta Journal published two editions, the first hitting the streets in mid-afternoon and then a later Blue Streak edition late in the afternoon. This edition was highlighted by a prominent line of blue ink along one side of the front page (a “blue streak”).

As near as I can tell, this edition’s sole purpose was to publish the closing stock market prices. Why were the closing stock market prices so important as to merit a special edition? Because they were the foundation of the local illicit numbers game, called “The Bug”. Once the Georgia Lottery came into existence, the illegal Bug went away, and with it went the Blue Streak edition. And, then the afternoon paper went away altogether; now it is just the morning Journal-Constitution.

There have been broad headlines about newspapers dying in Seattle and San Francisco, but, to be fair, these were the second newspaper in what was to become a one-newspaper town. Except for the most major of cities, most towns are one-newspaper towns, some of them not even daily newspaper towns.

And, there is a lot of anecdotal evidence of the problem.  Consider a personal experience, right here in River City.  A cautionary tale comes as a result of a restaurant review that appeared in the AJC about an El Salvadorian restaurant on The Buford Highway.  The evening after that review appeared, my lovely bride and I went there at 7:00 PM.  The place was authentic, so much so that the menus were in Spanish.  Half of the gathered crowd were from the someplace else, presumably some with their immigration papers.  But the other half of the crowd were white folks, and they almost all were in the age range of 55 – 75; which is to say, those who read newspapers.  So, things change, sometimes in little increments and sometimes in huge steps. The newspapers are in the huge step phase.

So far, the local response is that the Atlanta Journal Constitution has conducted an American Idol style search for a new conservative columnist.  In the interest of full disclosure, I was one of the 200 or so who applied for the position.  I didn’t make the first cut, which is probably as it should be since I don’t work and play well with others.  Or, maybe my baton-twirling act during the talent phase wasn’t a good idea after all.  But, seriously, I suspect that I didn’t make the cut because I’m approaching 60, and why replace one aging white guy with another aging white guy?  Of course, the laws being what they are, they would never admit that publicly (or privately), but the new conservative columnist is a younger white guy.  The fact that he is also articulate helps.  The “conservative columnist” search was part of a larger process.  As Kenneth Edelstein sagely put it “I think they’re trying not to offend”.  Well, it’s a little late for that.

In any case, the larger issue is that of demographics.  This is not to say that the aging community is not a rich source of revenues for a newspaper, it’s just a dying source.  Not that there aren’t businesses out there that are working the oldsters, but it’s a good idea to have a new group of gray hairs in the queue when their time comes to read the paper.  And, that doesn’t seem to be happening.  Many of them don’t even bother to wear a watch; why have something on your arm when you’ve got a perfectly fine cell phone that tells very accurate time?  In short, things change.

As an aside, the gray hairs are talking about the decline of newspapers, if for no other reason than it is a tocsin of the decline in importance of our generation; it’s so Baby-Boomer, let’s talk about me.  In any case, a remarkable number of newspaper readers describe the newspaper in terms of a specific event, and almost all talk of reading the paper while drinking a cup of coffee.  Sounds like a cross-marketing opportunity for Folgers in there somewhere.

In one of my earlier dissolute careers, an associate observed: “Times of great confusion are also moments of opportunity”.  And, that describes the situation right now.  But, when you think about it, the process that you and I are engaged in is part of the emerging solution.  I’m sitting here in my bathrobe, speaking my mind and you are doing whatever it is that you are doing.  And, that is a good thing, but there is a warning that should be articulated.

Years ago, the Fulton County Library computerized their check-out records.  Prior to that, everything was on paper and getting a handle on things was a daunting task, simply because of the sheer number of books involved.  With computerization came the collateral efficiencies, but also a small problem developed.  Once the Library knew which books were being checked out, it could also determine which books were not being checked out.  And, so started a process of culling out the non-performers (so to speak), but what was lost was the moment of random discovery.

That is, someone in the library system thought enough of a book to originally purchase that volume.  For many books, the choice was obvious.  Thus, there are probably a thousand copies of “Gone with the Wind” sitting on shelves in Atlanta libraries.  No comment here about the issues involved with this book, please.  In other cases, there might be one copy of a book that was purchased that sits forlornly on the shelves.  Given the intricacies of the Dewey Decimal System, a real hot-bed for interesting and odd stuff was in the 700’s, with the 740’s being the mother lode, if memory serves.  Times change.

One book comes to mind that I am absolutely certain has been removed from the Library, if for no other reason than its inherent oddity.  This book dates back to the 1960’s, and is a perfect chronicle of those deranged times.  This book details the adventures of a group of, for lack of a better word, hippies, who traveled about the country in an old school bus painted in psychedelic colors.  I’m sure that you can envision them, all furry and cute.  They’re passing around a huge Bob Marley and drawing the attention of every police district within a hundred miles of their path to nirvana.

Of course, a young lady who once called herself Sunshine is now called Mom and is living in elegant respectability in White Plains.  Her thirty-ish daughter comes home from a visit to the Library with her own kids and says: “Mom, I found this book in the 700 section of the  Library and it…….”  I leave it up to your imagination, but the point is that the random discovery often works to the benefit of humanity.

The newspaper has stood for the reporting of all of the news to the people who choose to read it.  The news has not always been pleasant, and the people who read the news may not have always agreed with it, but the paper stood as a matter of record.  Now, with custom news feeds and specialized web sites that speak directly to the narrow interests of a readership, the element of random discovery has been diminished.

The newspapers did themselves no good by taking a narrow view of events, tailoring their reporting to meet their own agenda.  Long before Bill Buckley brought the modern conservative movement into being, people were saying “Them lyin’ Atlanta newspapers“.  Back then, people had little opportunity to find another news outlet, so there was a burden which required that the editorial staff at least attempt even coverage.  With the mass growth of news outlets, there was less impetus to keep things balanced and fair, which would ultimately lead to the Atlanta Journal Constitution’s high-profile search for a replacement conservative columnist and a wide swing to the right to try retain what limited readership remained.

The response to biased reporting led to the opening of other outlets.  For the Washington Post, there is also the Washington Times.  For cities such as Atlanta, the response was other forms of news outlet, since the numbers don’t support the publication of two print newspapers.  The danger is that those news outlets do not have the editorial oversight that a big news organization has.  When Charlie Munger described the current newspaper dilemma as a national tragedy, I suspect that this was what he had in mind.

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The Wall Street Journal recently had a very small article about the latest chapter of a conflict, buried down in the Money & Investing section of the paper. For those who understand railroads, this should have been front page news.  The heart of the story is the ending of a contentious relationship between CSX Transportation, a major United States railroad, and The Children’s Investment Fund (TCI), a hedge fund which was started in 2004.

The basic elements of the story were: TCI and another fund, 3G Capital Partners, last year lobbied other shareholders for proxies to install a five-person board slate, which included the heads of both funds plus nominees with transportation sector experience and some who specialized in freight rail operations. They argued that CSX Transportation had underperformed in its rail operations and could generate more value to customers and investors. For more details, please see here.

Put another way, the railroad operators viewed their mission as running a successful railroad that yields returns on the stockholders’ investments. The hedge fund viewed the railroad as an investment that returns profits from the operation of the railroad. A dynamic had developed between the railroad managers and the hedge fund managers, one that boiled down to a question of how to run the railroad. Which is to say, how to spend the money which the railroad was bringing in as revenues. Of course, with the fall of revenues, the possibility of peeling off dividends becomes less of a possibility, thus the exit of the Children’s Fund.

Many were concerned about the effect of a hedge fund, which had the goal of maximizing financial returns, being in control of an entity that served the public good. And, the railroad is an entity which could wreak havoc on local communities if a train derailed. Or if goods could not be delivered in a timely fashion. In short, the railroads are institutions which our country relies upon to support the public good, but are, at the same time, privately financed institutions.

At the core of this dissonance is maintenance, the regular and routine activities performed by the railroad to make sure that it can continue its mission of moving freight. This specifically includes track maintenance, which is the regular replacement of crossties, leveling and alignment of the track and related activities. Maintenance is a big item for a railroad, and one way to improve financial performance in the short term is to defer maintenance. It works in the short term because instead of spending the money to keep the track in shape, you spend the money on other things, such as dividends to the investors. And it is the track which is the heart and soul of a railroad; without good track, the railroad cannot perform.

Deferred maintenance is a slow and pernicious process, and even in this era when everything is a crisis, deferred railroad maintenance would likely slip under the radar until things were really bad. Recovery from the effects of deferred maintenance are expensive and equally slow. I’m old enough to remember when the railroads of the United States were on their collective knees. World War II had been the railroads’ greatest hour, when they hauled soldiers and war materiel, giving the extra effort to win a war against tyranny. During World War II, maintenance had been largely deferred, and in the wake of the war, there was a period of financial recovery that led to a significant decline in railroad revenues. Something had to give; it would be the railroads’ infrastructure that took the hit. And as the track deteriorated, train operations deteriorated in tandem. As the trains slowed down, freight customers found other modes of delivering their goods.

Additionally, the railroads were regulated by the Interstate Commerce Commission. The nature of the ICC was covered well in an article in the Wall Street Journal, August 14, 2001. In a review of John Steel Gordon’s book “The Business of America”, reviewer John Lilly states: More typical is Mr. Gordon’s evident enthusiasm for free and fair markets. In “R.I.P, ICC” he presents an unflattering obituary of the Interstate Commerce Commission, which ended its days in 1995, having “outlived the problem it was created to manage by several decades.”

The net effect was that the railroads had reached a point when they could no longer operate trains at the speed necessary to attract freight customers, and were regulated in such a way that they could not easily shed losing operations. The ICC should stand as an example of unintended consequences to those who seek to use Federal government to govern private enterprise. It would be the Staggers Rail Act of 1980 that freed the railroads of their burden.

Railroads are, by their nature, unique and conservative institutions. Unlike other transportation modes, railroads usually own their own rights of way, maintain their own facilities and pay taxes upon those assets. Because their tracks cannot be easily moved, railroads are in it for the long haul, so to speak. You just don’t pick up the tracks, signals and structures and move them to another location if the business environment offers a new opportunity. If a new business opportunity becomes available, it has to be a big one for the railroad to commit to making the substantial investment necessary to reach that opportunity.

Compare this to a trucking line, for example, which simply routes its vehicles over public roads. Or an airline, which simply directs their aircraft to the new destination, to an airport maintained by a municipality under the direction of Federally paid controllers. While both trucking companies and airlines pay taxes and user fees, ultimately it is the taxpayers who support their business models in the notion of “The public good”. Most railroads, on the other hand, still pay for much of their own costs; this has changed somewhat in recent years with the states realizing that a good railroad can remove truck traffic from their highways. Which brings us to CSX, which has an advertising campaign that points out that the railroad can haul a ton of freight over 400 miles on a gallon of fuel. Efficiency.

The departure of Childrens Investment Fund Management, an aggressive hedge fund, from CSX signals an end to a quietly growing dilemma. Although this matter is over and done for the moment, there still remains the question of how the railroad operates in our society. Railroads in the United States are largely private entities that serve the public good. Past experiences with government operation of railroads have proven to be expensive, sometimes wildly so. People often point to the European passenger train as a successful model that the United States should follow. What is not seen are the costs of such an operation.

The railroad is, first and foremost, a financial entity. It is not a children’s toy.

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